If crying "uncle" is slang for surrendering, then Iraq's announcement yesterday that it might pull out of Kuwait amounted to something like saying "first cousin once removed" -- not quite "uncle" but a pleasing sound nonetheless. The right words, though, have not yet been uttered.

Words alone, especially in the Middle East, amount to little. It's instructive to bear in mind that Saddam Hussein once before promised to withdraw from Kuwait. That was in August, shortly after he seized the country. Baghdad even released film purporting to show its troops heading home. Satellite photos and other intelligence showed the opposite. Iraq was digging in -- and an indignant George Bush went ballistic, calling Iraq a liar. In essence, the war began that very day.

Similarly, while any Iraqi mention of a withdrawal from Kuwait is unprecedented, its apparent attempt to link it to the Palestinian issue is not exactly new. In the weeks preceding the Jan. 17 onset of the air war, it maintained that Kuwait could not be treated in a vacuum: Israel's occupation of the West Bank and Gaza Strip had to be on the table, too.

There were two problems with that condition: It was patently insincere and, if accepted, it would have rewarded Iraq for its aggression. The United States, leaning on its allies, rejected it.

Now the Palestinian issue has once again been linked to withdrawal from Kuwait. But even if Israel were predisposed to surrender the Occupied Territories -- and the government of Prime Minister Yitzhak Shamir most certainly is not -- the problem would remain incredibly complicated. The question of Jerusalem alone and Moslems, not to mention Christians -- may well be beyond resolution. Even within the Israeli peace movement, there is little support for giving up Jerusalem.

The linkage of the impractical (Israeli withdrawal from the Occupied Territories) with the practical and just (Iraq's withdrawal from Kuwait) is a hoary negotiating tactic. The United States and its allies are right to reject it. An acceptance would probably mean a truce and, in time, the inclination to accept the status quo.

Moreover, it would make Saddam Hussein the hero of the Arab world and put our allies, Saudi Arabia and Egypt, in an untenable position -- on the "wrong" side of the Palestinian question. Saddam Hussein is undeserving of such an honor.

War is the most horrible of man's endeavors, and no one in his right mind can favor it. But for Saddam Hussein, it is just another activity. He initiated a war with Iran, periodically called for peace and eventually wound up accepting a draw. Just how much he was deterred is evident from what he did next: the attempted genocide of the Kurds (through the use of poison gas) and the invasion of Kuwait. This man has what the police call "a previous." He cannot be trusted.

But he has stumbled, badly miscalculating the way a war would go. Iraq has been battered, and desertions from its army are increasing. Publicly, Saddam Hussein has extended the prospect of peace to his war-weary people, especially the troops who have taken such a pounding. If now, publicly, he has ventured the proposition that Kuwait is not all that dear -- that it is not, as he has maintained, an integral and historic part of Iraq, the vaunted 19th province -- then he has asked his people to fight on for a trivial purpose.

That lesson cannot be lost on those who do the fighting and dying. The very suggestion of a withdrawal from Kuwait triggered celebrations in Baghdad. Kuwait, once rich and uppity, is loathed in Iraq, but not hated or feared as an enemy. Saddam Hussein is improvising, taking advantage of a rising pro-Iraq sentiment in the Soviet military, the pressure brought on Mikhail Gorbachev, the debate in the United Nations and the revulsion over deaths of civilians. He is playing many cards, but holds the hand of a loser.

The bombing of a civilian air-raid shelter and those grisly pictures of the dead and wounded brought home to America and the world that this war, like any war, is a horrific enterprise. To recoil, to yell "enough," would be only natural.

But to leave Saddam Hussein enhanced in prestige, a military loser but a diplomatic winner, would simply set the stage for the next war -- one that might be far costlier than this one. After all, if 30 percent of his military has been destroyed, 70 percent remains -- that and a megalomaniac's enduring bitterness.

Clearly, the United States and its allies are winning the war -- and winning it in a rout. History, not to mention common sense, says that they should be the ones who set the conditions for peace. Time and time again, through United Nations resolutions and other means, they have done so: unambiguous and unconditional withdrawal from Kuwait.

That would be the cry of "uncle" the world is waiting to hear. Anything less is a victory for Saddam Hussein.